Question

When a firm uses an accelerated method of depreciation for tax reporting in order to minimize its tax burden, it will not really save any tax dollars in the end because depreciation method merely changes the timing of the depreciation expenses but not the total. Select one: True False

Answer 1

Answer:

False

Explanation:

An accelerated strategy of depreciation for tax brings genuine reserve funds. This strategy helps to save money which can be used to start some new venture or to put in extra resources in the business. It helps to decrease that taxable income which is why it is used significantly in many organisations. To save taxable money, the advantages of accelerated depreciation are far higher than straight-line depreciation.